The list is not complete, and many items may not be applicable, but better to find out early. Some of your personal affairs will not require changes, but others will. Knowing what the law requires can prevent later problems, such as suits to recover unpaid taxes or fees or finding out that your will or trust is not valid.

Additions or personal experiences welcome.

sengsational

10-26-2013 11:09 AM

I dream of an application where you can enter your situation and a destination and let it tell you how much of your money you'll be deprived of as a result of living there. The situation would have defaults, but it would let you change things. Like maybe it would presume you had two cars and drove x miles a year (for auto tag fees and fuel tax). You pick the destination, down to the specific house if you want (think: Zillow), and that gets various taxes, utilities, etc. Or maybe you just say "rent 1500 sf" or "buy 1500 sf" in such and such a county in or outside of incorporated city/town. And of course you'd need to enter your taxable, tax sheltered assets, pensions, social security, and what your burn rate is. This bit wouldn't need to be extremely detailed, but state income taxes are probably one of the biggest things to consider, and some states make it sting more or less with/without exemptions.

brett

10-26-2013 11:13 AM

The considerations are just as large, and gaining importance, when you consider becoming an expat for part of the year.

We live in Canada. We have been considering a second home. When we look into it in more depth, and with our accountant's advice, we realize that there are often serious tax considerations (income, capital gains, estate, property, etc) to buying property in the US or Europe. The advice is don't do it before understanding how to do it. Whether to register the property as an individual, a trust, perhaps a corporation. Plus the relevant income tax statutes on how many days you actually spend in the location.

Even within our own country income tax rates-federal and provincial- are based on province of residence as at Dec. 31. The differences in marginal tax rates can be as much a 12 percent of taxable income.

Meadbh

10-26-2013 11:19 AM

For those of us who are migrants, the question arises of returning to our countries of origin post RE. Assuming one has retained citizenship, there should be no legal impediment. However, there are financial and tax considerations. For example, leaving Canada would require a "deemed disposition" of all investments, including tax deferred ones, and would generate a very significant immediate tax liability which would certainly put a big dent in the retirement portfolio.

photoguy

10-26-2013 12:10 PM

Quote:

Originally Posted by Meadbh
(Post 1371388)

For example, leaving Canada would require a "deemed disposition" of all investments, including tax deferred ones, and would generate a very significant immediate tax liability which would certainly put a big dent in the retirement portfolio.

Wow. I never knew about this (I left Canada as a student with basically nothing). Something to watch out for if I bring investments back.

These deemed disposition rules apply to all capital property unless specifically excluded. Such excluded property includes Canadian real estate, Canadian business property and certain other exclusions, such as retirement savings in RRSPs, stock options and interest in some trusts.

brett

10-26-2013 12:45 PM

One of my former associates recently gave up his US citizenship. He had lived in Canada for many years and had no plans to return. The main reason he relinquished this citizenship was tax and the burden of filing US taxes every year.

I was very surprised when he told me that he attended a meeting in Toronto arranged by the US consulate that was 'packed to the rafters' of expats who we also doing the same.

Alan

10-26-2013 01:02 PM

Quote:

Originally Posted by Meadbh
(Post 1371388)

For those of us who are migrants, the question arises of returning to our countries of origin post RE. Assuming one has retained citizenship, there should be no legal impediment. However, there are financial and tax considerations. For example, leaving Canada would require a "deemed disposition" of all investments, including tax deferred ones, and would generate a very significant immediate tax liability which would certainly put a big dent in the retirement portfolio.

Another migrant here with similar issues to face, and we already have more complicated taxes because I receive a pension from a UK company and have a bank account into which the pension is paid (a 2nd UK pension will start in 3 years time plus I'll get UK SS at age 68).

We plan on becoming residents in both countries in 2016, spending 6 months in each country, with a permanent, rented, apartment in the UK.
This will increase the complexity of taxes enormously, plus what to do about healthcare, wills etc. (Even though we have a will in Texas, what if we die in the UK? Do we need 2 wills? Can you have 2 wills?)

Still got some homework to do over the next couple of years.

brett

10-26-2013 01:29 PM

One issue is that the situation can be a bit of a moving target. For instance, Italy and Spain are now moving in the direction of asking 6 month residents not only to file tax but also report all assets if the total value of their personal assets over something like 10K Euro. Looks like the base for future taxation.

I recently read that as Canadians, we are OK if we spend less than 180 days in the US. BUT...apparently the a second hurdle being introduced is a running three average of 132 days per year. Exceed those numbers and bear the tax consequences. These consequences can be potentially onerous-especially from a capital gains on sale of property or estate tax.

Meadbh

10-26-2013 03:11 PM

Thanks Photoguy! It looks like the definition changed in 2010, because this is not as punitive as I had thought. It does not include RRSPs for example, but it does include all real estate.

Another migrant here with similar issues to face, and we already have more complicated taxes because I receive a pension from a UK company and have a bank account into which the pension is paid (a 2nd UK pension will start in 3 years time plus I'll get UK SS at age 68).

We plan on becoming residents in both countries in 2016, spending 6 months in each country, with a permanent, rented, apartment in the UK.
This will increase the complexity of taxes enormously, plus what to do about healthcare, wills etc. (Even though we have a will in Texas, what if we die in the UK? Do we need 2 wills? Can you have 2 wills?)

Still got some homework to do over the next couple of years.

Even with the dual residence, you would need to declare a primary residence, (likely where you own real property) that will be where the primary will will be probated, secondary probate may be needed if real property exists in other juristictions (even true between states).
Now the real issues will be estate taxes/inheritance taxes. I do suggest you look around for a lawyer in the area you have set up as a primary residence who is experienced in multinational issues, to help you write the will. The critical issue is one called domicile of which you can have only one.
Here is a link to the a UK solicitor on the subject of domicile. http://www.lockharts.co.uk/site/serv...Planning6.html
Given the different inheritance tax regimes you may want to decide country will be primary, and spend like 190/175 days in each with the 190 in the primary country. (Not a lawyer either in the US or Solicitor in the UK)

kramer

10-27-2013 12:56 AM

Op, interesting post, thank you.

I am a retired US citizen residing in the Philippines and have a retirement residence card here (no visits to immigration necessary). I only visit the USA (mostly California) to see family and go on vacation, maybe an average of 45 days per year. I am a foreign resident via the bona fide residence test. Essentially, all of my physical belongings are in my rented residence in the Philippines. What remains in the USA are most of my financial accounts. I pay taxes only to the USA -- under Philippines law I owe no taxes to them.

I currently have a driver's license in Texas and a mail drop box there, that is considered my USA address. But someday I will probably not be able to renew the driver's license and then I will use my Philippines driver's license to drive in the USA on my trips (I checked, it's allowed). For doing things in the USA like credit card and other transactions that require an ID, I plan to get one of the passport wallet cards when I renew my passport next time. As I don't want to have to carry around my passport.

So since Texas was the last place that I had residence in, and my only continuing connection to there will be as a mail drop address, then my wills and estate stuff will go through Texas?

Since over 99% of my assets are financial (money in accounts, not things) and based almost entirely in the USA, my strategy has been to simply title the beneficiary field of my financial accounts with my chosen beneficiary (mom). However, I plan to change this when I get older and after my mom passes away, if she precedes me. I really would not know where to start in terms of writing a will. And especially if I have non-US-Citizen people in the Philippines to whom I would like to leave money.

traineeinvestor

10-27-2013 01:17 AM

It sucks.

I have long since concluded that I will not be able to spend more than three months a year in my country of origin (New Zealand) or buy a second home there without triggering material adverse tax consequences.>:(

jon-nyc

10-27-2013 05:20 AM

Years ago i was living in New York and accepted a multi-year expat gig down in Latin America. I was to be paid in dollars.

New York State considered it taxable income in that situation.

I had two friends in the same boat. The three of us rented a cheap one bedroom in miami to establish residency in FL, even though we really lived in latin america. The rent was far less than our tax obligation to NYS, and it was convenient to have a crash pad in the states. We used to joke that NY paid us to get an apartment in Miami.

HawkeyeNFO

10-27-2013 07:53 AM

Ask a military member their state of residence, and the overwhelming majority will say either Florida or Texas, for very obvious reasons.

My address on my voter card was actually washed away years ago by a hurricane.

Danmar

10-27-2013 08:13 AM

Quote:

Originally Posted by brett
(Post 1371386)

The considerations are just as large, and gaining importance, when you consider becoming an expat for part of the year.

We live in Canada. We have been considering a second home. When we look into it in more depth, and with our accountant's advice, we realize that there are often serious tax considerations (income, capital gains, estate, property, etc) to buying property in the US or Europe. The advice is don't do it before understanding how to do it. Whether to register the property as an individual, a trust, perhaps a corporation. Plus the relevant income tax statutes on how many days you actually spend in the location.

Even within our own country income tax rates-federal and provincial- are based on province of residence as at Dec. 31. The differences in marginal tax rates can be as much a 12 percent of taxable income.

Agree. We are residents of Alberta but also have properties in Arizona and Ontario. There are many issues as you described. Arizona and US residency is the most proscribed. Home there registered in trust to avoid onerous estate taxes. I don't mind paying cap gains taxes but estate taxes seem unfair to me, especially for a snow bird. We must spend less than 183 days in US to prevent becoming a US tax resident (heaven forbid) but also need to be aware of rules relating to "closer connection" that could be triggered if spending more than about 122 days in US on a three year rolling average formula. Rules for residency within Canada are more circumspect with the rules relying on the concept of "where you normally reside". The considerations are many but would include, where you spend your time, vehicle registrations, health care registrations, driver's licence, voting, etc. Many of these considerations can be managed but not all. Agree that the tax rates are quite different by province. Max marg rates for divs are of particular concern to me and are 14.5% pts lower in Alberta vs Ontario!

martyb

10-27-2013 09:36 AM

I'm currently a legal resident of Texas, which has no state income taxes on anything. My wife is currently a resident of Louisiana, which does tax income, but has much lower property taxes, car insurance, and gasoline taxes. In Texas, property taxes and gas taxes are considerably higher, but things like car insurance are about half the cost as in Louisiana.

When I retire in a couple of months, I'll be transferring my state citizenry back to Louisiana, since they exempt federal retirement income from taxes, and that's the source of my pensions.

Since we just bought a house in LA, it would be a only matter of time before Louisiana residency would catch up with me anyway, even though I'm currently living and working 3/4 of my time in Texas.

REWahoo

10-27-2013 09:39 AM

Quote:

Originally Posted by martyb
(Post 1371647)

My wife is currently a resident of Louisiana, which does tax income, but has much lower property taxes, car insurance, and gasoline taxes. In Texas, property taxes and gas taxes are considerably higher, but things like car insurance are about half the cost as in Louisiana.

I'm confused (see sig line). Is car insurance in LA higher or lower than in TX?

Alan

10-27-2013 09:47 AM

Quote:

Originally Posted by meierlde
(Post 1371617)

Even with the dual residence, you would need to declare a primary residence, (likely where you own real property) that will be where the primary will will be probated, secondary probate may be needed if real property exists in other juristictions (even true between states).
Now the real issues will be estate taxes/inheritance taxes. I do suggest you look around for a lawyer in the area you have set up as a primary residence who is experienced in multinational issues, to help you write the will. The critical issue is one called domicile of which you can have only one.
Here is a link to the a UK solicitor on the subject of domicile. Wills and Estate Planning - Domicile - Lockharts Solicitors London*
Given the different inheritance tax regimes you may want to decide country will be primary, and spend like 190/175 days in each with the 190 in the primary country. (Not a lawyer either in the US or Solicitor in the UK)

Great advice, and good link, thanks. Like Kramer we own no property in either country and almost all our assets have beneficiaries named. Only things like cars and furniture etc that are non liquid assets. We will make sure to spend at least 190 days/year in the USA since that is where we intend to remain domiciled.

harley

10-27-2013 09:57 AM

I'm curious. We're getting ready to relinquish our primary residence in VA, and doing the snowbird thing between our homes in FL and MD. Is there a requirement that you have to make your primary residence in the state where you spend the most time? Like we'll be in FL 5 - 5 1/2 months, and in MD for the rest of the time. But we'd like our primary residence to be FL, for obvious reasons. Is that lawful? If we need to we can extend our time in FL, but we don't want to. And actually, our time in MD will be less because we'll probably spend a month or so (broken into 1 week visits) travelling to VA and staying with DD and family. So I'm wondering what the legality issues are regarding declaring primary residence.

Btw, imoldernu, great list. I'm going to use it and if I run into any additions I'll let you know.

MichaelB

10-27-2013 10:05 AM

Quote:

Originally Posted by harley
(Post 1371651)

I'm curious. We're getting ready to relinquish our primary residence in VA, and doing the snowbird thing between our homes in FL and MD. Is there a requirement that you have to make your primary residence in the state where you spend the most time? Like we'll be in FL 5 - 5 1/2 months, and in MD for the rest of the time. But we'd like our primary residence to be FL, for obvious reasons. Is that lawful? If we need to we can extend our time in FL, but we don't want to. And actually, our time in MD will be less because we'll probably spend a month or so (broken into 1 week visits) travelling to VA and staying with DD and family. So I'm wondering what the legality issues are regarding declaring primary residence.

Btw, imoldernu, great list. I'm going to use it and if I run into any additions I'll let you know.

No time requirement in Florida. You should have no problem establishing residency there with 5 months of in-state time, as long as you meet other requirements, such as voting, drivers license, account domicile, etc.